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Companies have the potential to fall apart like a house of cards, which is why it is preferable to wind down operations when circumstances are dire. The process of winding down a company is one that is both difficult and necessary to complete. The dissolution of a private limited company is an even more challenging process. The provisions for voluntarily winding down a company or having the tribunal do so are outlined in Section 270 of the Companies Act of 2013. In the process of winding down a private limited company, there are a number of considerations that need to be kept in mind, and this document provides comprehensive information about both of those approaches.
A private limited company is regarded as an entity that conducts all of its business transactions with private ownership. In order to register a private limited company, you are required to have four roles defined and sorted before you can do so. These roles are as follows: two Directors, two Shareholders. It is not necessary to have four distinct individuals in order to be a part of the establishment; one individual can act as both a shareholder and as one of the directors at the same time. Company registration is done in accordance with statute, and the only way to dissolve a private limited company is in accordance with the law.
The company's name is removed from the register upon approval of the strike off, and it thus ceases to exist in the eyes of the law. Before proceeding with the strike-off application, the company must complete all of the required compliance. The application is accompanied by a number of documents and necessitates the assistance of a professional.
A relatively small amount of effort is charged for the liquidation: Due to the fact that there will be fees associated with the distribution of benefits, the expenditures or costs that are associated with the liquidation procedure are moderately low.
Preferences for Lessees After a drawn-out battle, investors will profit from the liquidation procedure as they will be qualified for a default instalment, as for the suggestion of credits given by all banks. This will be one way in which the liquidation procedure will benefit the investors.
During the process of liquidation, any organisation or substance that has been in rent for the recommended amount of time will have all rent agreements terminated. This means that the terms and conditions of the rent will no longer apply. Any fees or fines that are required to be paid will have their amount deducted from the benefits that are being offered.
Avoiding legal action that has been taken against the organisation: If the goals are will-fully passed by the Founders Directors or, they will ignore legal responses taken by the court or the council, and give a stage to the organisation chiefs so that they can focus on other business opportunities.
Once the process of liquidation has been completed, the executives and all organisation authorities are freed from all loan liabilities and burdens. This includes any and all financial responsibilities that may have been incurred prior to the liquidation.
According to the Companies Act of 2013, the following are the circumstances under which the Tribunal has the authority to halt the operations of a Private Limited Company:
In the event that a company is unable to pay its debts; In the event that the company has passed a special resolution stating that it will be wound up by the Tribunal; In the event that the company has acted against the interest of the security of the State, integrity, and sovereignty of India. Also, if it involves violating public order, morality, or decent behaviour; On the condition that the Tribunal has ordered to dissolve the company in accordance with Chapter XIX;
If the Tribunal believes that the affairs of a company have been conducted in a fraudulent or unlawful manner; If the Tribunal is of the opinion that it is justifiable and equitable to wind up the Private Limited Company; In the event that the Company has not filed the Annual Returns or financial statements with the Registrar for the previous five consecutive financial years. In the event that the Company has not filed the Annual Returns or financial statements with the Registrar for the previous five consecutive financial years.
Board meeting Resolution
Notice of EGM
Special Resolution in EGM
A given notice to the Registrar for Liquidator
Notice in Official Gazette
Advertisement in newspaper
Filing of statement of affairs
Filing of form MGT 14
The MGT 14 must be submitted no later than thirty days after the passage of the special resolution.
A statement of affairs is a document that is required in the process of winding up a company because it provides a detailed account of the assets and liabilities of the company.
Within ten days of the passage of the Special Resolution, notification is submitted to the Registrar.
Along with the government fees of Rs. 5000/- and a few necessary documents, Form STK 2 (the earlier form was known as FTE) must be submitted when a company is being dissolved. However, it is essential to take note of the circumstances under which a request for closure can be made.
It typically takes around ninety days from the time an application is submitted to the Ministry of Corporate Affairs for the Company to be removed from records maintained by the MCA.
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Private Limited Company Registration